Andhra plans to limit FCV tobacco production in view of ongoing crisis
Amaravati, July 17
With the Flue-Cured Virginia tobacco sector in Andhra Pradesh being gripped by a crisis due to surplus crop, the State government is planning to limit the production in the coming season.
Agriculture Minister Kinjarapu Atchannaidu said on Friday that farmers would be sensitised to limit production to 81 million kilograms for the 2026-27 season.
The Tobacco Board had authorised production of 142 million kg for Andhra Pradesh during the 2025-26 season, but actual production is estimated at nearly 240 million kg.
The surplus production, weak exports and sluggish procurement have pushed thousands of farmers into financial distress.
The agriculture minister on Friday held a teleconference on FCV tobacco procurement. Energy Minister Gottipati Ravi Kumar, Social Welfare Minister Dola Sri Bala Veeranjaneya Swamy, Tobacco Board Chairman, the Executive Director (ED), and the Director of Agriculture participated in the meeting.
According to an official release, the discussions focussed on measures to accelerate tobacco procurement and ensure farmers receive a remunerative price.
Minister Atchannaidu noted that procurement have gained momentum over the past four days, with 8.5 lakh kilograms of tobacco being procured daily.
With the current maximum price at ₹250, Minister Atchannaidu urged the Tobacco Board to pressure tobacco-buying companies to further increase the price.
He stated that with the procurement gathering pace, there is possibility of farmers securing even better prices.
Minister Atchannaidu advised the Tobacco Board Chairman and Executive Director to hold discussions with companies to ensure that even lower-quality tobacco fetches a remunerative price.
During the previous season, FCV tobacco fetched over ₹360 per kg but this time the price has plummeted to below ₹250. The average auction price was only ₹219.50 per kg about 10 days ago.
The distress faced by farmers is attributed to failure in production planning, procurement and export policy.
Taxation has also added to the farmers' woes. According to farmers, over 70 per cent increase in excise duty on cigarettes disrupted the tobacco value chain.
Chief Minister N. Chandrababu Naidu had written separate letters to Union Finance Minister Nirmala Sitharaman and Union Commerce and Industry Minister Piyush Goyal in May about the hardships being faced by FCV tobacco farmers because of the revised taxation policy on cigarettes.
The Chief Minister said the revised tax regime, effective from February 1, 2026, had adversely affected tobacco farmers in the State. He said the increase in GST on cigarettes from 28 per cent to 40 per cent, and a steep hike in excise duty ranging from ₹2,050 to ₹8,500 per 1,000 cigarettes depending on category and length, was affecting the interests of tobacco growers.
— IANS
Reader Comments
The excise duty hike is a major blow. 70% increase in excise duty and GST from 28% to 40% is brutal. The government is playing with farmers' livelihoods by targeting cigarettes. They should have phased this over 3-4 years, not overnight.
As a farmer from Guntur region, I am living this nightmare. Our family has been growing tobacco for generations. Price dropped from ₹360 to ₹219 per kg. We are in debt. CM Naidu's letter to Centre is correct but we need action, not just letters. 🥲
The problem is we are too dependent on tobacco. Andhra should diversify into other cash crops like mangoes, turmeric or cashew. But that needs government support for market linkages and subsidies. Just limiting production is a band-aid solution.
Good decision to limit production to 81 million kg. But will the government give compensation for lost income? And what about the companies - why aren't they buying at fair prices? The Tobacco Board should be more proactive in enforcing minimum prices.
I am curious - if GST on cigarettes increased to 40%, shouldn't the state also get more revenue to support these farmers? The Centre needs to share some of that extra tax revenue with Andhra to help farmers transition. That would be just and fair. 🇮🇳🧐
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